compensate the bailee

Also, the rights and duties of bailor and bailee needs to look after the goods to the same extent whether the bailment is for reward or gratuitous. Not doing the abovementioned, would hold the bailor responsible for all the damage suffered by the bailee, arising directly from such faults. The bailor may have an action in tort for conversion against the third party, if without any bailor’s express or implied authority the bailee himself bails the goods to the third party. Sanju delivers a piece of cloth to Manju, a tailor, to be stitched into a suit. The person delivering the goods is called the “bailer” and the person to whom they are delivered is called the “bailee”.

The garage attendant in the city acts as a bailee after you hand him the keys to your car as you head off to a restaurant. But there are plenty of instances where bailments occur in our everyday lives. Dr. JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career.

Started by NLU grads,LawBhoomiis a portal that provides information on the latest internships, jobs, legal opportunities, law notes, career guidance, study materials, and books for various exams like the judiciary, CLAT PG, AIBE, CLAT UG, etc. Apart from all these, interviews and internship experiences help students explore more opportunities in law. A lien provides a creditor with the legal right to seize and sell thecollateralproperty or asset of a borrower who fails to meet the obligations of a loan or contract. The property that is the subject of a lien cannot be sold by the owner without the consent of the lien holder.A floating lienrefers to a lien on inventory or other unfixed property. Various types of bailments will give the bailor the right to expect some kind of duty of care for the good by the bailee.

The right of lien arises by statute, or by express or implied contract, or by a general course of dealing between the parties in a particular trade. It implies that, under lien, the right is limited to the possession of some item or goods and does not extend to its sale, or making any change to such item or goods. Bailee’s lien may be of two types — Particular lien and General lien. Each there, there are so many cases of bailment then whether it’s one small matter or a big matter.

Case laws related to Bailor and Bailee

BAILEE is the person to whom such goods are delivered by the bailor.The contract of bailment may be express or implied but in simple words, bailment is the shift of possession of the goods from the bailor to the bailee. It can also be considered as any kind of handing over of goods in a simple language. A bailor transfers possession, but not ownership, of a good to another party, known as the bailee, under an agreement known legally as bailment. While the good is in the bailee’s possession, the bailor is still the rightful owner.


The Bailor has the right to give directions to the Bailee, regarding the manner of dealing with the goods bailed, which have to be obliged by the bailee. In case where the goods are transferred to pay a debt or to fulfil a promise, the Bailor has the full right to get the possession of the goods back in case of fulfilment of the promise or the payment of the debt, whatever the case may be. The Bailor is the owner or the possessor of the goods and possession is central to bailment.

The rights of a bailor include the right to claim compensation for damages suffered to the goods, the right to terminate the bailment, the right to sue for breach of the bailment contract, and the right to claim compensation for extraordinary expenses incurred by the bailee. The rights and duties of a bailee in India are crucial in determining the legal framework within which the bailment operates. The bailee has certain rights, including the right of possession, the right to compensation for expenses, the right to claim compensation for damages, the right to lien, and the right to recover compensation for the value of improvements made to the goods. On the other hand, the bailee also has certain duties, including the duty of care, the duty to return the goods, the duty to render accounts, the duty not to mix goods, a duty not to make unauthorized use, the duty to compensate for loss, and duty not to deny bailor’s title. The bailment contract means the transfer of possession of the product for a special purpose from the bailor to the bailee.

Contract of Bailment, Rights And Duties of Bailor and Bailee, License, Sale

A bailee who refuses to give delivery, except upon some unjust or unreasonable condition, is by default. Moreover, if the bailee fails to return or dispose of the good, then the bailee, at his risk, keeps the goods with him and if after that any loss or damage happens, the bailee would be held liable for the same. On the basis of above discussion, it can be analyzed that bailment is a contract in which a delivery of possession of specific goods is given to another person for a specific purpose and it is different from the concept of license and sale. The bailee and the bailor have to perform in accordance with the provisions of the Indian Contract Act, 1872 and the contract of bailment. In India, the concept of bailment is governed by the Indian Contract Act, 1872. Bailment refers to a contractual relationship between two parties, the bailor and the bailee, where the bailor delivers goods to the bailee for a specific purpose and for a specific period of time.

Rights and duties arising from bailment and liens – Lexology

Rights and duties arising from bailment and liens.

Posted: Wed, 26 Feb 2014 08:00:00 GMT [source]

The word ‘bailment’ has been originated from the French word ‘bailler’ which means ‘to deliver’. The term has been described in Section 148 of the Indian Contract Act, 1872. A bailor is an individual who temporarily entrusts possession of a good or other property to another party under a bailment agreement. Bailment describes the transfer of property from a bailor, who temporarily relinquishes possession but not ownership of the property, to a bailee.

Who is Bailee?

If the goods are blended with the bailor’s approval, both shall have a proportionate interest in the mixture generated. The bailee is bound to pay the costs of the separation and any damage arising from the mixing if the mixture is created without the approval of the bailor and when the commodities can be split or divided. But the bailee has to reimburse the bailor for his loss if the mixture cannot be separated. The burden of proof is on the bailee to demonstrate that he was reasonably careful and he is not responsible if he can prove this.

Vs. The Board of Trustees of the Port of Bombay and Metal Fabs India Pvt. The bailee therefore had the right to be compensated for the costs expended for bailment purposes. Delivery should be upon contract – Delivery of goods should be made for a purpose and under a contract that when the purpose is fulfilled the goods shall be restored to the bailor. If the goods of a person are possessed by another person without any contract, no bailment shall take place within the meaning of the definition.


Such duties, if are not taken care of, may make the bailee liable . Also, there are certain bailment contracts which exempt the bailee from any obligation or liability. However, it should be noted that the bailor is accountable for even those problems of which he/she is not aware in the case of a gratuitous bailment. The bailor’s responsibility is far greater in non-gratuitous bailment.

Bailment means a relationship in which one person’s personal property is temporarily held by another person. The ownership of the products or items is with one person and the possession is with another person. Section 165 says that in the cases involving more than one owner of the goods bailed, the bailee is under obligation to return it to any one of the owner or as per directions were given to him. It is a right to detain any property belonging to another person which is in the possession of the person exercising the lien in respect of any payment lawfully due to him.

The store was wooden, old and surrounded by a fence with gaps large enough for a person to enter. The wool was destroyed in the fire caused by an intruder who entered through the gaps, and set light to the store from outside. It was held that the broker, as a bailee, was responsible for the loss; he was in breach of duty because the fence was insufficiently secure to keep out intruders. In the contract of bailment, the ownership of the goods remains only in the hands of the Bailor and only the possession is provided to the bailee. Bailment is a common occurrence in various business and personal transactions, such as the storage of goods, loaning of objects, and hiring of services. It is important for both the bailor and the bailee to understand their respective rights and duties to ensure a smooth and lawful bailment arrangement.

Section 159 states that the bailor may ask for the return of loan at any point of time if the loan is provided gratuitously to him. However, he can claim compensation if he has suffered any loss from such act of bailor. Section 151 of the Contract Act provides that the bailee is under obligation to take care of the goods bailed to him as an ordinarily prudent man in his place would have taken under the similar situation. This means that the duty laid down by this section is general and uniform in nature. This section does not provide for any exceptional situations; rather it covers all the contracts of bailment.

Bailor: What it Means, How it Works, Responsibilities – Investopedia

Bailor: What it Means, How it Works, Responsibilities.

Posted: Sat, 25 Mar 2017 22:45:36 GMT [source]

If the contract of bailment is for a specified period, the bailment terminates as soon as the specified period expires. Furthermore, these explanations are applicable only when there is an absence of a contract to the contrary i.e., no contract against the holding of this right. For example, if goods are contained in a godown for payment and if it is not yet received, then it cannot attract Section 170 of the act, since the goods are just stored in the godown and no enhancement of goods, nor any labour or skill is rendered with regards of the goods.

At any given stage, if the bailment is gratuitous, the bailor may request the goods for usage, even though he has lent them for a set period or cause. In such a case it’s the bailor’s duty to indemnify the bailee for the amount by which the loss exceeds the benefit. Once the bailment is terminated, the bailee must return the goods to the bailor or dispose of them as per the bailor’s directions. Now here, B holds the right to a particular lien to retain the good, in this case, a diamond, and he can do so until he has received the payment for the services he performed. Furthermore, this right can only be held in respect of the goods on which skills or labour has been performed by the bailee. But it is an established principle that the right to lien may be exempted if there exists a contract against it.


If the bailee provides proof that he has taken reasonable care to avoid reasonably foreseeable damages, or had taken all reasonable efforts to avoid reasonably apprehended hazards, he would be waived from his liability. At the conclusion of the bailment time or when the purpose is achieved, the bailor has a duty to receive goods from the bailee. However, if the bailor refuses to do the same, then he or she is obliged to reimburse the custody and care fees accrued.

The bailee’s relationship to the bailor, who hands over the property, is established by a contractual agreement called a bailment. This relationship, referred to in legal terms as a bailment, is based on a contractual agreement between the bailor and the bailee. The bailment specifies the terms and purpose of the change in custody and is outlined in writing such as a receipt or chit. A bailee is an individual who temporarily gains possession, but not ownership, of a good or other property.

An Analysis Of The Hire Purchase Contract Under Common Law … – TheNigerialawyer

An Analysis Of The Hire Purchase Contract Under Common Law ….

Posted: Fri, 03 Mar 2023 08:00:00 GMT [source]

In the case of State of Bihar v. Bank of Bihar, a sugar company pledged the whole stock of sugar produced for advances made by the bank to the company. It was laid down that there was an absence of wrongful deprivation in the case, firstly since the taking over or seizure was lawful and secondly since the Cane commissioner retrieved money legally. Lexpeeps established in 2019 is totally dedicated to the legal fraternity where law professionals gets an opportunity to flourish their career in a better way. Lexpeeps organises different events debates seminars of its own and also organises the major law school activities on tie-ups with leading law schools. The short-term transaction between the bailee and bailor is governed by a contract, often as simple as the reverse side of a dry cleaning tag or receipt, or the chit from a coat check attendant. Will Kenton is an expert on the economy and investing laws and regulations.

There are different types of liens that are used to safeguard assets such as bank lien, real estate lien, but here we are going to specifically focus on particular lien and general lien. The responsibility of the bailee is to return the goods without request on the completion of the purpose or the expiration of the time period. In case if he fails to do so, he shall be held accountable for the loss, destruction, worsening, damages or destruction of goods even without dereliction of duty. If a bailor refuses to accept the goods from the carrier at a proper time, all the necessary expenses borne by the bailee which were incidental to the safe custody by him would be borne by the bailor. Even if the goods returned by the bailee are damaged, it is the duty of the bailor to accept the goods and then later claim damages.

After the accomplishment of the purpose, the Bailee needs to return these goods to the Bailor or dispose of them according to the directions of the Bailor. It is the bailor’s duty to reveal to the carriers the nature of the goods and if it requires extra care in case, he knows them to be dangerous such as explosives and when he omits such a duty, he is himself liable for any damage arising out of it. A bailor who has lent the goods for use gratuitously has the right to demand its return anytime, even if it is for a specified time or purpose, subject to an exception explained further.

If the bailor gives the property over to the bailee, then “actual delivery” takes place. When no change of physical possession takes place, the things remain where they are, but something takes place that makes them own the bailee. Section 156 and 157 speaks about the conditions wherein the bailor’s consent was not there while mixing the goods. In those situations wherein the goods are separable, the law imposes liability on the bailee for any loss or damage that the bailor might suffer due to such mixing. But if it is not possible to separate the goods, the bailor is entitled to claim reimbursement for the loss of goods.

As mentioned above, the bailee is given custody of a piece of property, but cannot legally lay a claim of ownership to it. This means the bailor is still the rightful owner, even while the goods are in the bailee’s possession. However, the bailee is responsible for the property’s safekeeping and the eventual return of the goods. The bailee should return the items to the bailor without any request if the bailing purpose is achieved or the period of time for which the goods were bailed has expired. If he doesn’t do so, it will hold the items at his risk and he will be liable for any loss or damage to the goods.

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